4 ms·

How is the position of WhatsApp significantly different than that of Snapchat? WhatsApp didn't need outside funding to grow huge...

by maneesh 10y ago

jasode 10y ago
WhatsApp raised "outside funding" of $250k from ex-Yahoo employees before publicly launching the app in November 2009. They then got another $8 million in April 2011 from VC firm Sequoia Capital. However, Jan Koum was already talking to Jim Goetz of Sequoia a year prior to that (Spring 2010) and it took several months of negotiation to close the deal. I don't think people would call Whatsapp a "bootstrapped company". Whatsapp did charge for the iOS App and also a 99 cent subscription but it's not clear if they were break-even or profitable from November 2009 to April 2011. Since they were a private company, I'm not sure if they have ever disclosed their financial details before the 2014 Facebook acquisition. [1]https://www.crunchbase.com/organization/whatsapp/funding-rounds https://www.crunchbase.com/organization/whatsapp/funding-rou...
- xiaoma 10y ago
  WhatsApp actually used pricing as a way to slow their growth and give Jan Koum's team time to scale their infrastructure. He talked about it in startup school a couple of years ago: https://www.youtube.com/watch?v=8-pJa11YvCs https://www.youtube.com/watch?v=8-pJa11YvCs
  - jasode 10y ago
    >WhatsApp actually used pricing as a way to slow their growth Yes, I've seen that video. Increasing the price to slow growth is a separate tool from weighing pros/cons of VC money to grow huge. At the time of Sequoia's 2011 investment, WhatsApp was estimated to have ~30 million users. It seems that Jan Koum felt it made more financial sense to get $8 million from Sequoia rather than from his customer base. If JK could raise subscription prices higher ($2? $5?) without his customers complaining to "self-fund" that $8M, that would have been financially better than giving up 10-15% of company ownership to Sequoia. He must have liked the first vc financial deal because he went back to Sequoia again for another $52 million. If JK is ever on stage again, maybe somebody can ask him why he didn't get that $60 million from his user base. It would be interesting to hear his thought process.
- replicatorblog 10y ago
  One of the important things about Whatsapp is that they raised only $60M. Comapare that to the the median $285M that the average active unicorn raised. I think it's less a story of billion dollar rounds vs. bootstrapping, and more a case for being efficient with capital.
- maneesh 10y ago
  You are correct --- I was mistaken about WhatsApp. Thank you for the reply.

How is the position of WhatsApp significantly different than that of Snapchat? WhatsApp didn't need outside funding to grow huge...

by maneesh 10y ago

How is the position of WhatsApp significantly different than that of Snapchat? WhatsApp didn't need outside funding to grow huge...

jasode 10y ago

WhatsApp raised "outside funding" of $250k from ex-Yahoo employees before publicly launching the app in November 2009. They then got another $8 million in April 2011 from VC firm Sequoia Capital. However, Jan Koum was already talking to Jim Goetz of Sequoia a year prior to that (Spring 2010) and it took several months of negotiation to close the deal. I don't think people would call Whatsapp a "bootstrapped company". Whatsapp did charge for the iOS App and also a 99 cent subscription but it's not clear if they were break-even or profitable from November 2009 to April 2011. Since they were a private company, I'm not sure if they have ever disclosed their financial details before the 2014 Facebook acquisition. [1]https://www.crunchbase.com/organization/whatsapp/funding-rounds https://www.crunchbase.com/organization/whatsapp/funding-rou...

xiaoma 10y ago
WhatsApp actually used pricing as a way to slow their growth and give Jan Koum's team time to scale their infrastructure. He talked about it in startup school a couple of years ago: https://www.youtube.com/watch?v=8-pJa11YvCs https://www.youtube.com/watch?v=8-pJa11YvCs
- jasode 10y ago
  >WhatsApp actually used pricing as a way to slow their growth Yes, I've seen that video. Increasing the price to slow growth is a separate tool from weighing pros/cons of VC money to grow huge. At the time of Sequoia's 2011 investment, WhatsApp was estimated to have ~30 million users. It seems that Jan Koum felt it made more financial sense to get $8 million from Sequoia rather than from his customer base. If JK could raise subscription prices higher ($2? $5?) without his customers complaining to "self-fund" that $8M, that would have been financially better than giving up 10-15% of company ownership to Sequoia. He must have liked the first vc financial deal because he went back to Sequoia again for another $52 million. If JK is ever on stage again, maybe somebody can ask him why he didn't get that $60 million from his user base. It would be interesting to hear his thought process.
replicatorblog 10y ago
One of the important things about Whatsapp is that they raised only $60M. Comapare that to the the median $285M that the average active unicorn raised. I think it's less a story of billion dollar rounds vs. bootstrapping, and more a case for being efficient with capital.
maneesh 10y ago
You are correct --- I was mistaken about WhatsApp. Thank you for the reply.